ECONOMY

Cypriots puzzle over coming currency change, fear inflation

FTERIKOUDI, Cyprus – When 90-year-old Margharita Frantzi hears talk about the introduction of the euro to Cyprus, her first thought is of rising prices. «Does that mean the price of bread will go up? My goodness,» exclaims the frail figure from the tiny village of Fterikoudi in the rural region of Pitsillia west of the capital Nicosia. Bent double from years of hard work, Frantzi dragged a bundle of weeds behind her up a steep mountain path – fodder for her goat – as she ruminated about the implications for her on January 1, 2008, when Cyprus swaps its pound for the single European currency and hands monetary policy to the European Central Bank. Frantzi’s reaction to the Mediterranean island’s upcoming currency change is an indication that she and the other elderly residents in places like Pitsillia may not be quite as well informed as they could be. «We have heard about the euro from the television. Nobody has come here to tell us what it means,» said Kyriakos Argyrou, 55, community leader from the neighboring village of Askas. Those who may be more in the know don’t appear to be any keener on the change. Polls suggest about half of Cyprus’s 700,000 residents oppose the introduction of the euro and more than two-thirds worry about the inflationary impact. Critics say a public information campaign has been slow moving and unfocused, with one newspaper describing it as a «major flop.» Advocates say the campaign has purposely steered away from going for maximum impact in the months immediately before the euro’s adoption. «We have a concrete strategic approach. It will be intensified as ‘e-day’ approaches,» said Andreas Charalambous, an official at the ministry of finance. «You start from the general messages, and then become more concrete as you explain concrete initiatives,» he told Reuters. The Cyprus pound will be locked into a fixed exchange rate against the euro for conversion purposes on July 10. Petros Marcou, chairman of Cyprus’s consumers’ association, says the information campaign has yet to fully take off pending the conversion. He says the groundwork has been done, and the association will play a pivotal role in monitoring prices. Monitor centers «Euro monitor centers will be created. We will be monitoring prices every month in an attempt to ensure there is no profiteering,» he said. Critics argue that there is a tendency to preach to the converted. «They (authorities) are effectively saying don’t do anything until the locking and afterward. I think it’s a load of balls,» said Costas Apostolides, an independent economist. «The euro effort should be over the top and not underplayed,» he said. Showing both prices on receipts is still voluntary, so few retailers issue them in pounds and euros. That will become compulsory after the pound is locked in against the euro, and businesses will be asked to sign fair-pricing agreements to prevent profiteering. The finance ministry’s Charalambous said a «euro bus» will be used to spread the word in the autumn. »People need practical information. We will go to places where we will give practical, one-to-one information,» he said. A region where walnut and cherry trees form a thick green canopy over jagged mountain peaks, picture-perfect Pitsillia has experienced a drain on its population in recent years as people move to cities in search of jobs. The few who are left are farmers – who blame the European Union for cheap imports which have crushed demand for their own products. «I don’t have a problem with the euro itself,» Argyrou shrugs. «But I am a bit concerned about prices going up.» Villagers reminisce how when Cyprus went metric in the 1980s and the traditional Ottoman oke, or «okka,» was replaced with kilograms. One okka is 1.3 kilograms. «There were people who charged per kilo what they were charging for the okka that made a lot of money,» said Andreas Manzipas, 77. Margharita Frantzi’s memory goes further back to the days when Cyprus was a British colony. «I’ll go and light a candle for you in the church. Have you got a couple of shillings to put in the collection box?» she asks. Shillings were ditched in 1955.

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